Was the Latest Banking Review Good News for Finance Professionals?
April 2013 saw the abolition of the much criticised Financial Services Authority and the rise of two new regulatory bodies. Their purpose? To stabilise the financial services sector and to monitor the behaviour of the banks and their staff. Banking professionals have been given a rough ride by the press and public in the fallout of the financial crisis which has led to many leaving the industry. However, new opportunities are arising as a result of the new regulations, for individuals who have specialist financial skills in the area of financial compliance.
The Financial Services Bill was passed in Spring 2013 to ensure that the banking scandals seen in recent years don’t happen again. The old Financial Services Authority was heavily criticised for failing to predict the lending boom which ultimately led to the financial crisis and not stepping in to prevent the risky banking practices which led to the failure of the likes of Northern Rock, the Royal Bank of Scotland and Lloyds which had to be bailed out by the taxpayer. The new bill is designed to prevent a repeat of that. It has seen the creation of the Prudential Regulation Authority (PRA) which is intended to stabilise financial services institutions and form part of the Bank of England. It has also led to the creation of a second body, the Financial Conduct Authority, which has become the new banking watchdog.
One of the first actions of the new FCA has been to bring in new rules separating bank capital from client money and their asset arrangements. These tight regulations are intended to stop bankers abusing their position in future.
The regulations include ring-fencing high street banking so that it is protected from the riskier business of investment banking. The regulator now has the power to split up a bank if it believes it is undermining the ring fence and will review the industry each year to ensure the ring-fence is working. The regulations also cover deposit guarantees to customers and a greater requirement by the banks to absorb any losses if they get into trouble.
For banking professionals, the news is mixed. While the tighter regulations could mean painful changes in working practices, they are also opening up new opportunities for candidates who have experience of the client assets sector. It would appear that there is a shortage of such professionals with the necessary experience to work effectively under the new regulations. Not only do these individuals need to have extensive banking experience, they need to have a full understanding of the regulations and the strength of character to stand up to the pressures from sales and trading colleagues. They also need to know how to interpret the new rules in a strategic way to ensure the future prosperity of the financial institution they’re working for.
The shortage of suitable candidates means salaries for compliance professionals are highly competitive. Individuals who are either approached by rival firms or who successfully apply for new jobs may even find themselves in the happy position of receiving a counter offer from their employers to persuade them to stay. It’s an unusual position for recruitment consultants to be in. Client asset management is one sector where it really is a buyers market and candidates can pick and choose, playing off one employer against the other.
Therefore it’s up to the recruiters to identify the candidates with the most appropriate skills. This can only come from extensive experience of the financial services sector. They need to be involved in highly developed professional networks, understand the needs of the industry against the new restrictions and identify the qualities required by candidates to thrive in a highly challenging economic environment.